Is health insurance expensive? For many individuals and families today, the honest answer is yes — especially when paying full price for traditional ACA major medical coverage without subsidies. Monthly premiums have risen steadily over the past decade, and when you add deductibles, coinsurance, and out-of-pocket maximums, the total cost of healthcare protection can feel overwhelming. However, understanding why health insurance costs what it does — and knowing the alternatives available — can dramatically change how much you pay while still maintaining meaningful protection.

For self-employed professionals, gig workers, early retirees, families between employer plans, or individuals who simply do not qualify for subsidies, major medical plans can consume a large portion of monthly income. Fortunately, short term health insurance, supplemental coverage strategies, and smart plan structuring can create affordable solutions that maintain financial protection without forcing families to overpay for benefits they may never use.

At Diversified Insurance Brokers, we help individuals compare major medical, short term health, supplemental medical, and alternative coverage options side-by-side so coverage decisions are based on facts, risk tolerance, and budget — not fear of the unknown.

Why Health Insurance Costs Have Increased So Dramatically

Health insurance pricing is driven by several major forces working together. Healthcare inflation consistently outpaces general inflation, meaning the cost of hospital stays, surgeries, pharmaceuticals, and specialist care continues to rise every year. Insurance carriers must price policies to reflect expected claims costs, administrative expenses, regulatory requirements, and risk pooling dynamics.

The Affordable Care Act dramatically expanded required coverage categories. While this improved access and consumer protections, it also increased the baseline cost structure of major medical plans. Policies must now cover preventive services, maternity, mental health, prescription drugs, and chronic condition management regardless of whether a specific enrollee is likely to use those services.

Additionally, guaranteed issue underwriting means carriers cannot decline coverage based on health status. While this protects consumers, it also means premiums must reflect a broader and often higher-risk pool of insured individuals.

Provider consolidation also plays a role. As hospital systems grow and merge, negotiating power shifts, often resulting in higher contracted service costs. Those costs are ultimately passed into premiums and cost-sharing structures.

Understanding the Real Cost of Major Medical Coverage

Many consumers focus only on monthly premiums, but total healthcare cost exposure includes deductibles, coinsurance, copays, and out-of-pocket maximums. A plan with a $700 monthly premium and a $7,500 deductible may cost significantly more than expected in a year where medical care is needed.

For individuals who rarely visit doctors or who maintain strong overall health, this structure can feel inefficient. Paying thousands per year for coverage that is rarely used creates frustration and drives interest in alternative coverage strategies.

This is where short term health insurance can provide meaningful financial protection at a fraction of the monthly premium cost, especially for individuals in transition periods.

How Short Term Health Insurance Reduces Monthly Cost

Short term health insurance focuses primarily on catastrophic and unexpected medical events. Because these plans do not need to comply with every ACA mandated benefit category, carriers can offer significantly lower monthly premiums.

Most short term policies allow flexible deductible selection, customizable benefit caps, and multiple coverage term lengths. This allows consumers to tailor coverage to expected risk windows rather than paying for full comprehensive coverage year-round.

Short term plans typically cover doctor visits, urgent care, ER visits, hospitalizations, surgeries, and new illness or injury treatment. While they do not cover pre-existing conditions or certain preventive services, they can provide powerful financial protection during transition periods.

When Short Term Coverage Makes Financial Sense

Short term coverage is particularly valuable during specific life transitions. Job changes often create waiting periods before employer coverage begins. College graduates often experience gaps between student and employer coverage. Early retirees frequently need bridge coverage until Medicare eligibility begins. Self-employed professionals may use short term plans while evaluating long-term coverage strategies.

Healthy individuals often benefit the most because underwriting allows carriers to price policies based on lower expected claim usage. This can produce dramatic premium savings compared to guaranteed issue plans.

Combining Short Term Coverage with Supplemental Protection

Many consumers pair short term medical with supplemental accident, critical illness, or hospital indemnity coverage. This layered approach can create strong catastrophic protection while maintaining significantly lower monthly cost compared to comprehensive ACA plans.

Supplemental plans provide fixed cash benefits paid directly to the policyholder. These funds can offset deductibles, lost income, travel costs, or other financial disruptions caused by medical events.

This strategy is especially valuable for self-employed professionals or business owners who cannot afford prolonged income disruption due to illness or injury.

Long-Term Strategy: When to Transition Back to Major Medical

Short term coverage is designed as transitional protection, not permanent long-term insurance. Individuals should consider transitioning back to ACA or employer group coverage when qualifying life events occur, open enrollment windows reopen, or health needs change.

The key is flexibility. Insurance planning should evolve alongside income changes, family needs, and career transitions.

Employer Coverage vs Individual Coverage Cost Differences

Employer group coverage often costs less because employers subsidize a portion of premiums and risk is spread across larger populations. However, individual plans provide portability and customization. Many individuals move between these structures multiple times throughout their careers.

Understanding how to transition between coverage types without gaps is one of the most important aspects of long-term health planning.

How to Evaluate Whether You Are Overpaying

If you are paying high premiums but rarely using medical services, reviewing alternative coverage strategies may make sense. If your deductible is so high that you effectively self-fund routine care, alternative structures may reduce overall annual cost exposure.

Insurance planning should always align with risk tolerance, income stability, and expected healthcare utilization patterns.